Irish Life & Permanent chairperson Gillian Bowler has refused demands from shareholders that she stand down and hand back her salary.
Shareholders at the company's AGM in Dublin today were critical of the €8 billion deposits with Anglo Irish Bank which allowed Anglo to dress up its accounts.
Ms Bowler described the deposits as 'misguided'. She said the transactions were never disclosed to the board and she was shocked when she found out about them. Ms Bowler apologised and said that, from any perspective, the deposits were absolutely wrong and should never happened.
But she turned down demands to stand down, saying it would have been easier to walk away but she felt an obligation to lead the bank in a time of crisis.
Shareholder and former employee Jimmy Carr asked her to forgo her salary as a show of solidarity with shareholders. Ms Bowler said the chair was a salaried position and what she did with her money afterwards was between herself and her conscience.
IL&P to appoint new risk chief
Irish Life and Permanent is to improve its corporate governance structure following the controversy over the Anglo deposits.
IL&P lost its CEO Denis Casey, finance director Peter FitzPatrick and head of group treasury David Gantley over the transfers.
Shareholders at IL&P's AGM heard that it has accepted recommendations by consultants Oliver Wyman that it upgrade its risk management functions.
These recommendations include the appointment of a new head of group risk, who will sit on the executive managment team. The group will also separate the reporting lines of internal audit and risk management from finance.
IL&P said it was also commited to reviewing and strengthening the risk and control culture throughout the financial institution and added that it has taken steps to improve management communication and reporting to its board.
'The Anglo transactions represented a serious breach of the high standards to which this company and our staff aspire,' chairman Gillian Bowler told shareholders at today's AGM.
'The fact that they could have occurred without any reference to the board was the biggest shock and disappointment and we've taken steps that will prevent a recurrence,' she added.
IL&P is still searching for a new chief executive and is expected to make an appointment over the next few months.
Ms Bowler also told today's AGM that IL&P hopes to name its new chief executive in June.
The AGM was also told that the group plans to create a new holding company in the coming months, to provide it with 'greater flexibility'. The measure will need shareholder approval.
Lending continues to weaken - trading update
In a trading update issued ahead of its AGM today, Irish Life and Permanent said that new residential mortgage lending is about 20% of 2008 levels.
The lender said that lending demand in continues to be weak and is expected to remain so for the full year.
IL&P said that arrears have increased across all loan portfolios since the start of the year as the economy has slowed further and unemployment increased.
It said that in the Irish residential mortgage market, the rising arrears will result in higher levels of incurred but not reported provisions in 2009. It added that non-performing loan cases - over 90 days in arrears or impaired - were 2.6% by the end of March. This compares to 2% in December.
Chairperson Gillian Bowler later told RTE radio that the bank would not repossess the homes of mortgage holders who found themselves in financial difficulty this year.
In the UK, it said that non-performing loan cases were 4.2% in March, up from 3% in December. The bank said that the extent and speed of UK interest rate reductions have been a major factor in driving the improvement in arrears experience. It added that the corner may have been turned for UK arrears and that provisioning will peak this year.
On the life and pensions side of the business, IL&P said sales in Irish Life Assurance for the first quarter of 2009 fell by 41%. It said that retail investment and savings business is showing the largest fall as cash is being placed on deposit.
Its protection business is performing relatively well despite the major decline in mortgage related business.
IL&P says that liquidity conditions in the first quarter were difficult as the Irish banking sector saw overseas commercial deposit outflows.
Shares in IL&P closed up 6.4% to end at €2.61 in Dublin.